IP Expenses

For today's corporations, IP assets function in much the same way as a king's castles. But the expenses necessary to procure IP assets and enforce IP rights may not get the same respect or receive the same priority from many corporate budgets, particularly those seeking ways to cut costs during tough times. In-house counsel today are faced with a quandary: IP procurement and enforcement costs are increasing at a time when corporate law departments are under pressure to reduce costs, especially spending on outside counsel. The root of this dilemma is that IP assets are increasingly (and justifiably) seen as key to corporate success and a potential profit center, yet the expenses of monetizing those assets (including protecting hard-won market space) are still typically treated as Selling, General and Administrative Expenses (“SG&A”) rather than as part of “costs of good sold.” In other words, in-house lawyers can do great good for their companies by deploying IP assets to realize direct monetary return for their companies, but they are under more pressure to reduce expenses because of the inaccurate perception that IP-related expenses do not add to the bottom line, a perception that stems from accounting conventions.

The bottom line is that whatever their formal accounting treatment, IP expenses should not be treated as overhead. IP assets should be viewed as strategic assets of a company that can be deployed defensively to protect the company's investments, or offensively to increase revenue and margins. In light of the strategic importance of IP, shouldn't corporate decision makers weigh the costs and benefits of IP procurement and enforcement campaigns with the same rigor and focus that they consider for a product launch?